Chip crisis will reduce Renault production by 500,000 vehicles

FILE PHOTO: The logo of the carmaker Renault at a dealership in Paris, France, August 15, 2021. REUTERS / Sarah Meyssonnier

LONDON, Oct 22 (Reuters) – Renault said on Friday it would cut its production by 500,000 vehicles this year, more than double its previous forecast, due to a shortage of semiconductors around the world, but maintained its profit outlook thanks to the increase. car prices and cost cuts.

During a presentation to analysts, Renault CFO Clotlide Delbos said the automaker’s expectations for the semiconductor shortage in the fourth quarter were “still very poor because the information coming in from suppliers is very unreliable. “.

According to Delbos, the semiconductor shortage should ease somewhat by the end of the year with the end of the COVID-19 lockdown in Malaysia, key to global chip supply, but it would remain limited for much of 2022.

When asked about other raw materials, Delbos said Renault was not experiencing shortages, but it was experiencing price increases.

The shortage of semiconductors, used in everything from brake sensors to power steering to entertainment systems, has led automakers around the world to reduce or even suspend production, which has done raise vehicle prices.

Like its rivals, Renault has focused its production on more profitable models.

The French automaker’s grim forecast is more than double the 220,000 units forecast in early September and accounts for around 13% of the 3.75 million vehicles Renault sold in 2019 before the pandemic.

Sources close to the company had told Reuters this week that production losses would be much higher than previously anticipated.

The company’s shares were down 1.7% at 0831 GMT, falling the most on the Paris CAC-40 stock market, which was up 1%.

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The automaker said its order book reached a 15-year high at the end of September for the equivalent of 2.8 months of sales.

CFO Delbos said the lead time for the Dacia Sandero, a popular low-cost city car, was now six months.

During the third quarter, all-electric, plug-in hybrid and hybrid models accounted for more than 31% of sales, Renault said.

The automaker is on track to meet the strictest European CO2 emissions targets of 2021, he added.

Renault said third-quarter revenue had fallen 13.4% to € 8.98 billion ($ 10.4 billion), down from € 10.37 billion a year earlier, although rising car prices helped offset some of it. of the 22.3% drop in world sales.

Delbos said the company would complete a € 2 billion cost reduction plan in the coming weeks, more than a year ahead of schedule, and that it intended to accelerate other cost reduction plans.

The automaker said it would achieve positive free cash flow for its automotive business by 2021, excluding changes in working capital needs. That cash flow target will be boosted by a € 930 million dividend from its financial arm RCI Banque, Delbos said.

Renault said vehicle inventories had fallen to 340,000 cars at the end of the quarter from 470,000 a year earlier.

(1$=0,8601 euros)

(Reporting by Nick Carey; edited by Christian Schmollinger and Subhranshu Sahu, translated by José Muñoz in the Gdansk newsroom)

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